The world of business has entered the Age of Data. Now, business owners can record, track, and report on every activity in their job cycle.
But with all this visibility come questions. What should you be tracking? Which data is most valuable to you? What should you be doing with all this information you’re collecting? And nowhere are there more questions than around productivity.
“Productivity” can seem like a bit of a buzzword for business owners. You know that improving productivity can be a key to improving revenue, but what exactly does that mean?
In this article, we look at some different methods you can use to measure your elusive “productivity”, and offer some ideas for implementing these strategies at your own company:
Editor's note: This blog post was updated from its original version on 21 May 2020.
Strategy 1: The Simple Productivity Output Formula Strategy
This method calls for an extremely simple formula that can be applied in a similar way to different departments in your company. It’s the most basic definition of “productivity” and one of the easiest ways to get some actual numbers.
Here’s how to use the Simple Productivity Formula:
- Choose the output you will measure. Usually this is complete units made, or jobs completed.
- Find your input figure, which is the hours of labor put into production.
- Divide the output by the input.
- Assign a dollar value to the results, to measure your cost-benefit ratio.
- Measure non-manufacturing productivity in dollars instead of units
This formula works well in a factory-type setting, where each unit is of equal size and value. But in other types of businesses, it can fail to take into account complex jobs, different types of roles and working styles, and other factors. Because of this, it’s usually wise to mix this simply productivity formula with another productivity measure.
Strategy 2: The 360 Degree Feedback Strategy
In this strategy, you use the feedback generated from co-workers to measure the productivity of an employee. It sounds crazy, but in certain circumstances it can be an excellent strategy. Each employee has their productivity evaluated by their peers – including those both above and below them in the chain – in terms of how well they’ve fulfilled their duties and contributed toward the wider company goals.
In order to do this successfully, everyone in the team needs to have an understanding of the various roles and functions, as well as an expected level of output required for those roles.
The 360-Degree Feedback Strategy only works in an environment where your team interact a great deal, usually a smaller, tight-knit team. They need to be able to provide accurate commentary to you on each other’s habits. Before beginning a programme of 360-Degree feedback, you’ll need to provide some training to ensure employees are versed in the correct way to provide feedback. Each person needs to provide feedback based on their honest assessment of an employee’s overall contribution toward team goals, and not allow any personal feelings to crowd their judgement. Gathering feedback for the larger group also helps to counterbalance any potential personal grudges.
There are many templates available you can use to create parameters around your 360 Feedback. One we love is Start/Stop/Keep - you can find a great template from Manage Fearlessly.
Strategy 3: Time Tracking & Project Management Software
Clever online time tracking and project management software like WorkflowMax exists to help you track productivity at a glance. By submitting timesheets electronically, employees track data more accurately and you get an by-the-job look at exactly how your team are performing. With WorkflowMax, you can even use this data to run performance-based reports to see which employees or contractors are completing the most jobs or logging the most hours.
If your team works on site or remotely across the world, then online time tracking and project management software is a great solution, as it enables you to collect accurate data no matter where your employees are.
Of course, tracking time is only one measure of a productive and contributing employee, and depending on your type of business, it might not be your best productivity measure. See our recent article on productivity metrics for more information.
Strategy 4: The Monitor Social Media Strategy
Several managers – such as Erika London at iAdventure, who “friends” her employees on FB – follow the wisdom that any employee posting to social media or otherwise messing around on the internet during their workday is contributing less than their peers who might stay off Facebook. These companies take a hardline stance toward personal computer use on company time, and will strictly monitor social media and internet time and single out people they believe to be taking advantage.
Personally, we don’t advocate this strategy, as we think it takes a confrontational approach to productivity, instead of working with employees to give them ownership for their own work.
Strategy 5: The Profit = Productivity Strategy
In the business world, profit is everything. After all, we all know that money makes the world go round. (Or is that the sun’s gravitational force?)
So measuring productivity at your company by the amount of profit generated makes perfect sense. For small businesses, measuring productivity in terms of profit is often seen as the preferred method because it’s simple, and cuts right to the chase.
In service businesses, such as creative agencies, measuring by profit also ensures employees aren’t penalised for time spent thinking creatively or working to produce the best product possible for the biggest client. Instead, their results are measured by the value (profit) they bring into the company.
The main productivity = profit measurement is the “team effectiveness ratio”, which measures how much gross profit the company earns for every dollar spent on salary. This can be better than measuring profit against time as the goal is to get your team to work smarter, not longer.
Strategy 6: The “Getting Shit Done” Strategy
Can you measure productivity simply by how much is achieved? Some – including Doreen Bloch of Poshly Inc, – believe you can. She doesn’t care how many minutes are spent on a task, or when those minutes were spent, only what tasks are completed.
You can track productivity in this way by breaking down projects into individual tasks (which is done as part of the WorkflowMax project management system). These tasks can then be assigned to the employee best able to handle them. Every person has their own KPIs in terms of the tasks they’re responsible for, and can track how many they can tick off in an hour/day/week/month.
Keeping everyone informed of project goals and milestones ensures projects remain on schedule, and emphasis is placed on the completion of each task, instead of the hours logged for the week.
Strategy 7: The Daily Check-In Strategy
Some business owners just want to keep their team on task, and aren’t so concerned with output so much as the ability to stay on task. So they have their team give daily updates of what they’re working on and what has been achieved. These daily updates also flow into weekly and monthly goal-setting and planning.
How you do this in your company is up to you. You may do a check-in:
- Over the phone or a conference call
- Via Google Hangouts - you can even make a daily event in your calendar
- In a dedicated Slack channel
- Via a round-robin style morning meeting (US company Method uses this method for their monday morning “huddles”)
- In a quick email
Daily check-in can work wonders for employees who need validation for hard work and who struggle with procrastination, but beware that certain personality types will find this type of system quite overbearing. If done incorrectly, it can veer into the territory of micromanagement, which you want to avoid at all costs. It’s best employed alongside a system of trust and ownership, when each team member can be responsible for setting their own schedules and deadlines.
Strategy 8: The Service With a Smile Strategy
Measuring productivity in service staff can be tricky. Of course, you want to push your team to answer as many support tickets as possible, in order to avoid a backlog. But you also don’t want to encourage speed over good customer service. It’s no good having a quick response time if your responses are rude and condescending, is it?
When thinking about measuring productivity of service centre staff, most companies use a combination of measurements:
- The output: number of tickets answered in a certain period of time
- Feedback: a customer satisfaction score, derived from customer feedback about that particular staff member. You can use your support tickets or automated telephone surveys to collect this data
You can use whatever equation you believe best represents the duties your team perform and the importance of good customer service over quantity of tickets. There may be other factors you’d like to include in your equation, depending on the nature of your product, such as:
- How long a customer has to wait on hold
- Retention – the number of customers who return to the business after making a support call
- How long it takes for an order to be fulfilled
- The number of customer complaints
It’s important when considering an equation for your support team that you establish a baseline – where your company should be performing in terms of service. This will help you measure employee performance. You can adjust this baseline every year to take into account the current market.
These productivity measurements don’t just help you, as the business owner, to achieve your goals quicker. They also give a valuable glimpse into the value your company provides in the market, and the talent and drive of your team. But more than that, productivity measures can help your employees and contractors understand how they work and improve areas where they are weak. They can improve focus and foster ownership and leadership skills within your team.
Improving productivity starts with getting the right data. WorkflowMax all-in-one job management software will help your professional service business track and manage every aspect of your job from quotes to time to invoice and everything in between.
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